Under what circumstance will the aggregate expenditure function shift upwards?
A)If the price level rises.
B)If the price level falls.
C)If consumer expectations turn pessimistic.
D)If the age of consumer durables is very low.
E)If income rises.

Question

Quizplus · Accepted Answer

A fall in the price level increases the real value of money, leading to higher consumption and investment, thus shifting the aggregate expenditure function upwards.

Under What Circumstance Will the Aggregate Expenditure Function Shift Upwards